The European Commission is filing a bill to tax Internet companies such as Amazon and Google. First, Brussels is waiting to further expand an international tax agreement. That deal would lead to a global minimum profit tax, which also applies to large technology companies.
Harsh American Criticism
The group was due to present legislative proposals for the European digital tax next week. That plan has now been put on hold until the fall. U.S. Treasury Secretary Janet Yellen, who was a guest in Brussels on Monday, has been harshly critical of European plans because, according to him, they mainly affect US companies.
On Saturday, the G20’s richest nations agreed to tax companies’ profits at least 15 percent. Earlier, the G7 and 130 countries of the OECD supported the US-initiated tax reform.
There are exceptions like Ireland, Hungary and Estonia, and Yellen is trying to make them realize the importance of the agreement. “There needs to be an end to the accounting tactics that allow companies to convert capital income into taxation and prevent them from paying their fair share,” he said.
Ireland stuck with the low profit tax
During breakfast in Brussels on Monday, Yellen wanted to bring his Irish counterpart, Basel Donohue, aboard. Without success. Ireland is open to changes in the way it taxes multinational corporations, but is sticking to its low 12.5 per cent corporate income tax rate to attract businesses. Minister Donoho said talks would continue under the auspices of the OECD, the club of rich countries.
The international tax plan has two pillars. Pillar One is that companies pay taxes in the countries where they sell their products or services. Pillar Two Minimum Profit Tax. Taken together, this should ensure that multinational corporations pay higher taxes in more countries. This requires the consent of the parliaments of the participating countries.
Yellen still has to get tax plans in his home country. According to the US Congress, he expects a 15 percent second pillar to be incorporated into the regular budget bill later this year. But depending on where the companies operate, the tax plan will take longer. “The details of one of the pillars have not yet been negotiated,” he said. It remains to be seen whether this will require a two-thirds majority in the Senate. If so, Democrats and Republicans should embrace the plans.
Finally, the tax on kerosene. Europe wants it, but is against air travel
Air traffic in Europe faces the kerosene tax. How hard it will be cut is still in question.
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